Re: FIAT and FERRARI and GM

[Nicky Avery <nicky@domain.elided>]

> From: "TOM SANOR" <mygoose@domain.elided>
>
> It's hard to imagine GM actually bringing over Alfas to sell.  Of course
> GM's dropping Oldsmobile, which sold in the hundreds of thousands annually,
> and that makes you wonder what they'd expect sales-wise from Alfa Romeo.


Not necessarily anything like that. I think they figure most Olds buyers will go
to Buick, if they stay with GM, and that would remove any ?s about Buick's
future. Olds is a low margin/high volume operation and the volume isn't high
enough to bring in an acceptable bottom line (see below) but ...


>
> In the book  ALL CORVETTES ARE RED    it is stated that GM sells 25,000
> Corvettes annually, year after year, and they make a neat $10,000. profit
> per each  (isn't that $250,000,000.?).  Yet the book describes how GM nearly
> discontinued the Corvette in the early 90s for lack of interest.
>


... with Alfas starting at around $35-40K the margin looks quite different.
If GM can build up sales to 20K cars a year at a $5,000 markup, they walk away
with $100 millions, which isn't bad when you figure that it is FIAT that has to
come up with the capital to do the manufacturing. It's a whole lot better than
actually making 17K vans and shipping them to Germany.

There has to be enough sales volume to keep the dealers in business, justify
everyone's investment in holding parts inventory, justify the advertising,
training the mechanics, printing the leaflets, certifying the cars to gummint
regs etc etc. How you get there does matter: selling 20K cars at $5,000 markup
or 200,000 at $500 brings in the same money but the capital investment needed to
manufacture and market 200,000 cars is a bit different from what is needed to
for only marketing 20,000.


 > Now you tell me how serious they could be about importing from Italy and
 > selling a real enthusiasts' Alfa.
 >

I think they are very serious about importing Alfas. Ford overpaid for Jaguar
but it is going to make money in the end. GM got SAAB but it's proving hard to
break SAAB out of it's market niche. Perhaps unfairly and pace Michael Smith,
SAAB is not really the brand most men think of in terms of a cool car to impress
people (especially women) and, probably, vice versa. Despite all the terrible
things done to it, Alfa still has market sex-appeal and GM doesn't have too many
alternatives. The latest Alfas are doing well in Europe and elsewhere; FIAT is a
motivated supplier. What more encouragement does GM need?

Nicky
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